Venture Capital Investments In Crypto Companies Drop by Over 70% In One Year – Report states
According to crypto data provider, RootData, June saw the lowest amount of funding from venture capitalists going toward digital assets.
By Anna B Kiwanuka
Venture capital investments in cryptocurrency companies have experienced a significant decline of more than 70% over the past year, as reported by RootData, a prominent crypto data provider. The data reveals that in June 2022, the digital asset space secured $1.81 billion across 149 funding rounds. In stark contrast, this year witnessed only 83 projects raising a total of $520 million, making it the lowest-funded month recorded to date.
RootData’s findings indicate a clear downward trend in venture capitalists’ interest in the digital asset space, despite occasional increases in certain months. Notably, September 2022 set a record high with $1.85 billion in funding, distributed across 138 rounds. June of the previous year had the largest number of funding recipients, with 149 rounds.
The infrastructure category emerged as the top-funded sector, with $213 million raised last month for 26 projects. However, this still represents a nearly 50% decrease compared to the previous month, when 28 projects received $410 million in funding.
Among the infrastructure projects, Gensyn AI, a UK-based startup, secured a significant victory by raising an impressive $43 million in a Series A round led by a16z crypto.
The second most funded category is CeFi, or centralized finance, which includes companies like OPNX and Chiliz. It received $101 million, accounting for almost 20% of the total financing. Games followed closely in third place, with $62 million, with Mythical Games leading the way by raising $37 million in its Series C1 funding round. DeFi and NFTs complete the list of funded categories, ranked accordingly.
In the past year, Ethereum dominated the funding landscape with 1,826 projects receiving financial support, followed by Polygon (MATIC) with 1,076 funding rounds.
Coinbase Ventures emerged as the most active venture capital firm, participating in 71 rounds over the past year. Hashkey Capital and Shima Capital followed closely, funding 54 and 49 projects, respectively. It is worth noting that the once-prominent crypto asset class has taken a back seat to other investments, particularly in the field of artificial intelligence.
The diminished interest from venture capitalists in the crypto asset space can be attributed to various factors. Companies like FTX and Terra, which have faced negative publicity, may have contributed to the decline, as well as the banking turmoil that affected crypto-friendly banks. Additionally, recent regulatory clampdowns on platforms such as Binance and Coinbase in the United States, a country that has been a leading force in crypto investments, have further dampened investor enthusiasm.